You’ve come to terms with the fact that you’re insolvent, done your research, and you think you’re ready to talk to a trustee about making a consumer proposal. But wait…what happens to your house if you do? Will you lose it? Will the bank repossess?
Not necessarily. As long as your mortgage payments are up to date and your housing costs fit within your budget under a proposal, you may be able to keep your home. You will still have to declare it as an asset, however, and your trustee will have to determine how much equity you have—this will help him/her to determine what you should offer your creditors under your proposal.
If you decide that you can’t afford to keep your home, you can choose to turn it over to your bank when you file your proposal. By doing this, any money still owed to the bank after it sells the property will be included in the proposal terms. Alternatively, you can sell the home yourself in order to fund your proposal, using the money from the sale (after paying out your mortgage) to pay for all or part of what you agree to pay your creditors.
If you decide to keep your home, it will be up to you to keep your mortgage payments up to date; these payments will be separate from any payments made to your trustee under your proposal. And, should you decide to sell or refinance your home during your proposal period, you’re free to do that as well.
Next week: A look at what happens if your creditors refuse your proposal.